Whoever called the growth in the Republic of China (ROC) the “Taiwan Miracle” must have meant it and whoever put Taiwan among the “four Asian tigers” is equally so. As they say “seeing is believing” and having come back from my first visit to Taiwan recently, I am indeed impressed with the progress that country has achieved in a relatively short time.

The progress made there is a result of rapid industrialisation and high economic growth rates since the 1950s despite the adverse relations with the People’s Republic of China (PRC) and the near war like situation at times.

The little resources brought from mainland China in the late 1940s and the aid from other countries coupled with a stable and accommodating government allowed the shear hard work of the people to bring positive results, which was preceded by land reforms to increase agricultural output sufficiently and to allow the government to concentrate on infrastructure and education.

Therefore, between 1952 and 1982, economic growth was on average 8.7 per cent, and between 1983 and 1986 at 6.9 per cent and the Taiwanese never shied from entering simple industries such as making umbrellas and bicycles to gain experience and move later on into industries that are far more advanced and sophisticated such as machinery, electronics, computers and petrochemicals.

Cool down

Even in 2010, economic growth was at 10.7 per cent having recovered from the world crisis of 2008. However, high expansion rates cannot be always maintained and the Taiwan economy has cooled down to 4 per cent growth in 2011 due to the continued problems in the US and Europe and the slowdown in China, the main export destinations of Taiwan. The forecast for 2012 is now estimated at 2 to 3 per cent but is expected to improve during the remaining months of 2012 if the crisis in Europe is resolved and the economy picks up in other regions of the world.

No matter what, the end of hostilities between PRC and ROC since the early 1990s brought additional opportunities to Taiwan and companies moved to invest in mainland China where only in 2011 more than $12 billion (Dh44 billion) were invested there accounting to more than 86 per cent of total Taiwan outward investment. In the same year 40 per cent of Taiwan exports went to China. The relaxation of travels to Taiwan by China amounted to a growth in tourism and a boost to the service industry.

The decline of Taiwan’s exports to its traditional destinations in the US, Europe and Japan encouraged Taiwan to expand exports to the six Asean countries (Thailand, Singapore, Malaysia, Indonesia, Vietnam and the Philippines) where exports showed a growth at 6.2 per cent this year in comparison to declines somewhere else. Also external investment by Taiwan into these countries increased sharply, by 174 per cent, in the first half of this year compared to a decline of its investment in the US by 72 per cent and in China by 22 per cent.

Taiwan now prides itself by a number of achievements on the ground among which is the mass transit system in Taipei where the metro construction started in 1988 and the first 10.5 kilometre line went into operation in 1996. The system now comprises 10 lines with a total length of 110 kilometre and 101 stations with additional expansion well under way including a link to Taipei international airport. Passengers in 2011 were close to 1.6 million and the overall ridership passed five billion in February this year. Building on this success another mass transit system started operations in the city of Kaohsiung in 2008. The country’s motorways are very highly developed yet Taiwan completed the high speed railways to connect its major cities and improve the transportation infrastructure.

Showpiece

The 101 tower was the highest building in the world until 2010 when it was passed by Burj Khalifa in Dubai. It stands as a showpiece of Taiwanese engineering and construction ability and a famous tourist attraction to view the whole of Taipei and its environs from above.

To cut the story short, one has to remember that in 1962, Taiwan had a per capita gross national product of $170, which grew rapidly such that by 2010 it became $35,227 adjusted for purchasing power parity (PPP) closely similar to that of Germany at $36,033 in the same year.

So how does all this affect the energy situation and the hydrocarbons industry in Taiwan? Wait until next week.

The writer is former head of the Energy Studies Department in Opec Secretariat in Vienna